Aspects of Financial Markets

Question 1

What Is Financial Markets Role?

Answer 1

Financial Markets Facilitate the creation and transfer of financial assets and obligations . They bring together the entities that have funds to invest with entities that have financial needs .

Question 2

WHAT is the BENEFITS of using intermediates and financial Markets ?

Answer 2

1 - Improve ALLOCATIVE EFFECIENCY because of their special expertise .
2 - Availability of RELATIVELY RAPID and LOW COST transfers of capital

Question 3

Financial Markets are not particular place , —-

Answer 3

but rather than the totality of supply and demand for securities.

Question 4

Securities Include a very wide variety of instruments some of the most basic are ?

Answer 4

1 Stocks
2 Corporate Bonds
3 Mortgages
4 Consumer Loan
5 Leases
6 Commercial Paper 
7 Certificates of deposit
8 Governmental Securities 
9 Derivatives Of Many Kind 
and new kind of securities are continually being developed

Question 5

Securities

Answer 5

Securities are fungible and tradable financial instruments used to raise capital in public and private markets.
There are primarily three types of securities: equity—which provides ownership rights to holders; debt—essentially loans repaid with periodic payments; and hybrids—which combine aspects of debt and equity.

Question 6

Which of the following economic functions is provided by the securities markets?

A. A marketplace in which inefficient and expensive investment transactions take place.

B. Unstable security prices because of frequent price changes.

C. A small number of transactions.

D. Facilitation of the issuance and purchase of new securities.

Answer 6

Answer (D) is correct.
Securities markets facilitate investment by providing a marketplace for
investors to conduct inexpensive transactions efficiently. Thus, investors
are assured that they will have a place to buy and sell securities. Securities
markets can handle continuous transactions that are based on the values
and judgments of investors. Securities markets increase liquidity of
securities by providing a marketplace. Thus, prices are relatively stable due
to smaller price changes. Securities markets also facilitate the issuance and
purchase of new securities.

Question 7

Which of the following is not true about financial markets?
A. Financial markets are the total supply and demand for securities.
B. Financial markets facilitate borrowing and lending of financial assets and obligations.
C. In perfectly competitive markets, financial intermediaries act as price setters to clear the
market.
D. Financial markets change over time, causing people to adjust their pattern of consumption.

Answer 7

Answer (C) is correct.

Financial markets bring entities that have funds to invest together with entities that have financing needs. They facilitate the transfer of assets and obligations. Due to this activity, financial markets cause people to adjust their consumption patterns. Financial intermediaries increase the efficiency of financial markets through better allocation of financial resources, not by clearing the market